Morris County Real Estate Blog

A Financial Plan for Your Home

Smitha Ramchandani — Mon, 08 Mar 2010 17:06:11 GMT

Article From HouseLogic.com By: Richard Koreto Published: August 28, 2009

Your home is probably the biggest investment you'll ever make. Create a financial plan that takes into account repairs, upgrades, mortgages, insurance, and taxes.

You probably already have a financial plan for yourself in place. Most likely you sat down with an adviser at some point to set up a budget and diversify your investments. Or maybe you did it yourself online or at the dining room table.

But what about your home specifically, probably the biggest investment you'll ever make? Did you really take everything into account: repairs and upgrades, the mortgage, insurance, and taxes? Probably not.

You need a separate financial plan for your home. Spend a weekend creating one. Once you have a handle on your home's expenses, you can devise a long-term strategy that'll let you live there for years with maximum enjoyment and minimum anxiety.

The mortgage: Paying it-and then some

Yes, you already shell out a lot for your mortgage, but can you pay more? Even a little extra each month can add up. Let's say you have $200,000 outstanding principal and a 20-year fixed-rate mortgage at 5%. Your monthly payment is $1,319.91. But if you can manage to pay another $100 a month, you'll save $14,887 in interest. Run the numbers (http://realestate-calc.com/Mortgage_Calculators/Mortgage_Calculator_Input_Add_Payment.asp) for yourself.

Alan D. Kahn, a financial planner in Syosset, N.Y., likes the idea of early payoff because lowering debt leaves you free to spend money elsewhere later on. There's an emotional benefit as well. It can feel awfully good to own your house outright as soon as possible. And don't fret too much about losing the mortgage interest deduction come tax time. Toward the tail end of the life of a loan most of your payment is going to the principal, not the interest.

Nevertheless, the same extra $100 might also go into a retirement plan every month, or be put aside for the inevitable home repairs (more on those later). Michael Kay, a financial planner in Livingston, N.J., says while a debt-free life may be enormously important to your peace of mind, an extra $1,200 toward your child's college fund every year may feel even better. It's about what's ultimately important to you, both emotionally and financially.

Insurance: Protecting your property

You'll want homeowners insurance with full replacement coverage (http://www.houselogic.com/articles/homeowners-insurance-time-for-annual-check-up/) in case your house is burned to the ground. This sounds simple, but be careful on the calculation. Remember that you own a house as well as the land on which it sits. So even though you bought your home for $300,000, it may cost only $100,000 to rebuild it. Your policy limits should reflect this.

The differences are regional. Where land is at a premium, like much of Southern California, a higher percentage of the purchase cost is for the property rather than the structure. Where land is cheap, like much of North Dakota, most of the value of a new house is the house itself. Don't be deceived by shifts in market values. You may have bought a $1.2 million townhouse in Florida during the boom that now may only sell for $600,000. But the replacement cost of the townhouse hasn't changed much, so you can't cut insurance costs that way.

Do, however, try to cut costs by asking your insurance agent about discounts. Making structural improvements, such as adding storm shutters, can lead to lower rates. Membership is certain groups, such as AARP or veterans' organizations, entitles some policyholders to breaks on premiums as well.

Repairs and renovations: By choice or necessity

Throughout the life of your house, you'll be making two kinds of changes. The first is the fun kind, like a marble floor for the living room. The second is the essential, behind-the-scenes change: a new water heater. You don't have a choice about when you'll do the latter, but you can prepare for it financially.

It's a good idea to have a rainy-day fund. Start with the inspection report you received when you bought the house. Did the inspector indicate that you would need a new roof in five years? A new furnace in 10? Get estimates on what these repairs will cost and start saving. Consider ongoing non-emergency maintenance too. Do you live in New England? Price a snow blower and get bids from plow services. Resist the temptation to take care of everything with home equity loans (http://www.houselogic.com/articles/a-guide-to-equity-loan-options/), which defeat efforts to pay off the mortgage early.

As for the discretionary upgrades, act prudently. Matthew P. Havens, a financial planner in Hingham, Mass., has seen too many people rationalizing lavish upgrades as an investment when they really were lifestyle decisions. According to Remodeling magazine (http://www.remodeling.hw.net/2009/costvsvalue/national.aspx), an upscale major kitchen upgrade, for example, could cost nearly $112,000, but only about 63% of that will be recouped in the home's resale value. This isn't to say you shouldn't upgrade. If you can afford to redo your bathrooms, go ahead. Just don't confuse your necessary repairs (new oil furnace-about $4,000) with your discretionary upgrades (Viking range-$6,000 and up).

Taxes: (Almost) no way around them

Taxes are an essential part of your home's financial plan. The bank that holds your mortgage may already handle your real estate taxes with an escrow account. If so the expense is built into your monthly mortgage payment. Check your statements or call the lender. Otherwise create a dedicated fund for property taxes, which can run into the thousands of dollars annually.

You may be able to reduce your tax burden by getting a reassessment. Do your homework first. Are comparable houses taxed less than yours? Ask the local assessor what formula is used to set tax rates. Kay, the New Jersey financial planner, researched and then challenged the assessed value (http://www.houselogic.com/articles/appeal-your-property-tax-bill/) of his own home and got a 15% rollback.

If you're in a special group, you might get some help from state or local programs. Check around to see what's available in your area. New York State, for example, has its Star Program (http://www.orps.state.ny.us/star/index.cfm) for giving senior citizens some relief from school-related property taxes.

Richard J. Koreto is a freelance writer. He has been editor of several professional financial magazines and is the author of "Run It Like a Business," a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.

Smitha Ramchandani is a licensed real estate Broker-Salesperson in Morristown West, New Jersey. She is a Buyer Specialist and a Home Marketing Expert.. You can reach Smitha and her team online at: http://www.Morris-Homes.com or http://www.ChathamMoves.com or http://www.EastHanoverMoves.com or http://www.FlorhamParkMoves.com or http://www.MontvilleMoves.com or http://www.DenvilleMoves.com or http://www.ParsippanyMoves.com

Are you getting the Home Buyer Tax Credit You Deserve?

Smitha Ramchandani — Thu, 14 Jan 2010 17:39:44 GMT

The Home Buyer Tax Credit has been Extended and Expanded.

Now Both First-Time Home Buyers and Move-Up/Repeat Home Buyers who qualify can take advantage of the New Tax Credit.

Along with today’s historically low mortgage rates, it creates a Unique Opportunity for Buyers

Key Details:

The $8,000 tax credit for first-time buyers has been extended through April 30, 2010.
Current homeowners are eligible for a $6,500 tax credit, provided you have lived in the home you are selling as a principal residence for five consecutive years within the last eight years.
Income limits for eligible buyers were increased from $75,000 to $125,000 for single buyers and from $150,000 to $225,000 for married couples.
Time has been added to allow for closing the home purchase. As long as you have a binding sales contract by April 30, you will then have until June 30, 2010, to close the purchase transaction.
To qualify, the home must be your primary residence and have a purchase price of $800,000 or less.

How it works:

The amount of your credit will be first credited toward any tax liability for the year of purchase. Then the remainder will be refunded to you. (For example a first-time buyer with a $2,000 tax liability would receive a check for $6,000).
Any single-family residence purchased to be used as a principal residence (including condos, co-ops) will qualify if it is purchased by April 30, 2010 for $800,000 or less and closed by June 30, 2010.
The full amount of the credit is available for individuals with adjusted gross income of no more than $125,000 or $225,000 on a joint return. Above those incomes, the amount of the tax credit decreases until the maximum limit is reached – $145,000 for an individual or $245,000 in joint income.

For More Details visit Extended and Expanded Home Buyer Tax Credit.

Smitha Ramchandani is a licensed real estate Broker-Salesperson in Morristown West, New Jersey. She is a Buyer Specialist and a Home Marketing Expert.. You can reach Smitha and her team online at: http://www.Morris-Homes.com or http://www.ChathamMoves.com or http://www.EastHanoverMoves.com or http://www.FlorhamParkMoves.com or http://www.MontvilleMoves.com

December 2009 Condo and Townhome Sales Report- Morris County New Jersey Real Estate Recent Townhome/Condo Sales

Smitha Ramchandani — Mon, 04 Jan 2010 15:09:59 GMT

December 2009 Condominium and Townhouse Sales Report - Morristown, Madison, Chatham, Denville, Randolph, Parsippany, Rockaway, Hanover, East Hanover, Montville, Morris Plains, Morris Township, Florham Park, Roxbury, Butler, Lincoln Park, Morris Twp., Mount Arlington, Mount Olive, Riverdale, Whippany, Washington Twp., New Jersey Real Estate

Town	Address	List Price	Style	Beds	Baths	Garages	Sold Price
Butler Boro	47 HAMBURG TPKE	$249,000	Multi Floor Unit	1	2	0	$244,000
Butler Boro	476 Cambridge Drive	$256,000	First Floor Unit, Townhouse-End Unit	2	2	0	$240,000
Butler Boro	207 TERRACE LAKE DR	$374,900	Multi Floor Unit	2	2.1	1	$357,500
Chatham Twp.	11G SENTINEL CT	$247,000	One Floor Unit	1	1	1	$233,000
Chatham Twp.	20 LEXINGTON CT	$349,900	Townhouse-Interior	2	1.1	1	$337,450
Denville Twp.	33 DIAMOND SPRING RD	$319,900	Multi Floor Unit, Townhouse-Interior	2	1.1	0	$302,500
Denville Twp.	64 GLATTLY DR	$579,000	Multi Floor Unit	3	2.1	2	$560,000
East Hanover Twp.	127 CASTLE RIDGE DR	$435,000	Townhouse-End Unit	2	2.1	1	$418,000
East Hanover Twp.	53 CASTLE RIDGE DR	$499,900	Townhouse-Interior	3	2.1	1	$461,000
Florham Park Boro	58 Brooklake Road	$359,900	First Floor Unit, One Floor Unit	2	1	1	$355,000
Florham Park Boro	250 Ridgedale Ave. A-3	$420,000	Townhouse-Interior	2	2.1	2	$385,000
Hanover Twp.	132 SUNRISE DRIVE	$309,000	One Floor Unit, Townhouse-Interior	2	2	1	$297,500
Hanover Twp.	64 SUNRISE DR	$325,000	One Floor Unit	2	2	1	$320,000
Hanover Twp.	1204 FOX CHASE LN	$474,000	Townhouse-Interior	2	2.1	2	$445,000
Hanover Twp.	503 Spring Hollow Drive	$499,000	Townhouse-Interior	2	2.1	2	$508,861
Hanover Twp.	702 Spring Hollow Drive	$525,000	Townhouse-Interior	3	2.1	2	$525,121
Harding Twp.	3 POPLAR LN	$459,000	Townhouse-Interior	2	2.1	1	$420,000
Jefferson Twp.	34 PINE HOLLOW CT	$205,000	Townhouse-Interior	2	2	1	$217,300
Jefferson Twp.	18 Petersburg Ct	$215,000	Multi Floor Unit, Townhouse-Interior	2	2	1	$210,000
Jefferson Twp.	12 Old Fourth	$385,000	Multi Floor Unit, Townhouse-Interior	2	2.1	1	$370,000
Lincoln Park Boro	65 HOMESTEAD LN	$299,900	First Floor Unit	2	2	0	$295,000
Madison Boro	318 Main St	$444,900	Townhouse-Interior	3	2.1	1	$439,900
Madison Boro	95 GREENWICH CT	$499,000	Townhouse-End Unit	3	2.1	1	$480,000
Montville Twp.	26 EUGENE DR	$495,000	Townhouse-Interior	2	3.1	1	$485,000
Montville Twp.	49 LENOX CT	$549,900	Townhouse-Interior	3	2.1	1	$525,000
Montville Twp.	11 Duryea Place	$998,800	Colonial	5	4.1	2	$980,000
Morris Plains Boro	3D FOXWOOD DR	$246,900	First Floor Unit	1	1	0	$225,000
Morris Twp.	212 Pitney Place	$229,000	One Floor Unit	2	1	0	$215,000
Morris Twp.	37 PIPPINS WAY	$675,000	Townhouse-Interior	3	2.1	1	$650,000
Morris Twp.	5 CARRIAGE HILL DR	$1,225,000	Townhouse-End Unit	4	4.1	2	$1,400,000
Morristown Town	12-E DORADO Drive, Unit 12-E	$319,900	Townhouse-Interior	2	2.1	0	$330,000
Morristown Town	12-B DORADO DR	$350,000	Townhouse-Interior	2	2.1	0	$345,000
Morristown Town	7 Thomas Trail	$356,000	Townhouse-Interior	2	2.1	1	$330,000
Morristown Town	7 PROSPECT STreet 709	$389,900	Hi-Rise, One Floor Unit	1	1	0	$330,000
Morristown Town	13 TAFT LN	$405,000	Townhouse-Interior	2	2.1	1	$377,500
Morristown Town	36 TWOMBLY CT UNIT B	$409,500	Townhouse-End Unit	2	2.1	1	$345,000
Morristown Town	89 TAFT LN	$425,000	Townhouse-Interior	2	2.1	1	$410,000
Mount Arlington Boro	68 Zachary Way	$426,900	One Floor Unit	2	2	1	$426,900
Mount Arlington Boro	28 LAKESHORE DRIVE	$498,900	Townhouse-Interior	3	3.1	2	$490,000
Parsippany	201 N BEVERWYCK RD APT 5	$164,900	One Floor Unit	1	1	0	$139,999
Parsippany	189-59 LITTLETON RD	$169,000	First Floor Unit, One Floor Unit	1	1	0	$155,000
Parsippany	2467 ROUTE 10	$179,000	One Floor Unit	1	1	0	$170,000
Parsippany	2467 ROUTE 10 E Bldg 2 / 3A	$188,335	First Floor Unit, Townhouse-Interior	1	1	0	$183,475
Parsippany	2467 ROUTE 10 29-7B	$189,900	One Floor Unit	1	1	0	$192,000
Parsippany	2350 STATE ROUTE 10-E26	$194,900	Development Home, One Floor Unit, Townhouse-Interior	1	1	0	$190,000
Parsippany	74 STOCKTON CT	$369,000	Townhouse-Interior	3	2.1	1	$353,000
Parsippany	83 PATRIOTS RD	$379,900	Townhouse-Interior	2	2.1	1	$377,000
Parsippany	75 PATRIOTS RD	$382,000	Townhouse-End Unit	3	2.1	1	$373,000
Parsippany	63 ALBERT CT	$419,000	Townhouse-Interior	3	2.1	1	$405,000
Parsippany	5 SUMMERHILL DR	$449,000	Townhouse-End Unit	3	2.1	1	$422,000
Pequannock Twp.	4101 Tudor Drive	$309,900	Townhouse-End Unit	2	2.1	0	$285,000
Pequannock Twp.	3305 TUDOR DR	$316,575	Townhouse-End Unit	2	2.1	0	$308,000
Randolph Twp.	207 BOULDER RIDGE DR	$337,000	Townhouse-End Unit	2	2	1	$318,000
Randolph Twp.	149 ARROWGATE DR	$400,000	Detached, Townhouse-End Unit	3	2.1	2	$400,000
Riverdale Boro	5102 SANCTUARY BLVD	$199,990	One Floor Unit	1	1	0	$199,990
Riverdale Boro	5119 SANCTUARY BLVD	$199,990	One Floor Unit	1	1	0	$199,990
Riverdale Boro	5118 SANCTUARY BLVD	$209,990	Townhouse-Interior	1	1	0	$199,990
Riverdale Boro	5201 SANCTUARY BLVD	$214,990	Townhouse-Interior	1	1	0	$214,990
Riverdale Boro	5220 SANCTUARY BLVD	$219,990	One Floor Unit	1	1	1	$219,990
Riverdale Boro	5115 SANCTUARY BLVD	$239,990	Townhouse-Interior	1	1	1	$239,990
Riverdale Boro	5420 SANCTUARY	$244,990	One Floor Unit	1	1	1	$244,990
Riverdale Boro	80 MOUNTAINVIEW CT	$259,900	One Floor Unit	1	1	0	$255,000
Riverdale Boro	6204 BROOKHAVEN COURT	$334,990	One Floor Unit, Townhouse-Interior	2	2	1	$300,000
Riverdale Boro	1210 WHARTON CT	$339,000	One Floor Unit	2	2	1	$320,000
Rockaway Twp.	2208 FRANKLIN LN	$159,000	One Floor Unit	1	1	1	$150,000
Rockaway Twp.	322 RICHARD MINE RD C8	$199,000	First Floor Unit, One Floor Unit, Townhouse-End Unit	2	1	1	$175,000
Rockaway Twp.	16 HILLSBOROUGH CT	$285,000	Townhouse-Interior	3	2.1	0	$270,000
Rockaway Twp.	66 WOODLEDGE CT	$319,999	Townhouse-End Unit	3	2.1	0	$310,000
Rockaway Twp.	3311 CLEVELAND LN	$339,000	One Floor Unit, Townhouse-End Unit	2	2	2	$310,000
Roxbury Twp.	62 DRAKE LN	$274,900	First Floor Unit, One Floor Unit	2	2	1	$268,000
Roxbury Twp.	127 DRAKE LANE	$284,500	First Floor Unit, Townhouse-End Unit	3	2	1	$275,000
Roxbury Twp.	119 Autumn Court	$295,000	Townhouse-Interior	2	2.1	1	$280,000
Washington Twp.	2 SCHINDLER SQ	$239,000	Townhouse-Interior	2	1.1	1	$231,000
Washington Twp.	72 Schindler Square	$239,900	Townhouse-End Unit	2	2.1	1	$225,000
Washington Twp.	13 Trafalgar Ct.	$275,000	Townhouse-End Unit	3	2.1	2	$260,000
Wharton Boro	23157 WESTVIEW	$265,000	Townhouse-Interior	2	1.1	1	$242,500

Technorati Tags: December 2009 Morris County Real Estate Sales

Smitha Ramchandani is a licensed real estate Broker-Salesperson in Morristown West, New Jersey. She is a Certified Buyer Specialist and a Home Marketing Expert.. You can reach Smitha online at: http://www.Morris-Homes.com or http://www.ChathamMoves.com or http://www.EastHanoverMoves.com or http://www.FlorhamParkMoves.com or http://www.MontvilleMoves.com